Editor’s Note: Updates throughout with comments from virtual press conference
Republic Services is ordering a record 2,500 Nikola Tre-based battery-electric truck garbage trucks, generating up to $2 billion in revenue for the electric truck startup.
The order could expand to up to 5,000 trucks, Nikola (NASDAQ: NKLA) said. The news sent company shares soaring. They traded up almost 19% intraday at $43.66.
“We hope and intend to get to 5,000,” Republic Services President Jon Vander Ark said during a virtual press conference Monday. “We felt 2,500 was a good commitment number and let Nikola be sure it had what it needed.”
Republic Services (NYSE: RSG) is the second-largest recycling and solid waste provider in the U.S. Its 18,000 refuse trucks trails only Waste Management (NYSE: WM).
Deliveries in 2023
Deliveries from Nikola’s new $600 million greenfield assembly plant in Coolidge, Arizona, are expected to begin in 2023. On-road testing is likely in early 2022 with a couple of trucks being tested in 2021. The expected driving range is 150 miles. That would allow the emptying and compacting of 1,200 residential trash cans.
Tre production for Europe begins in 2021 in a joint venture in Germany between Nikola and Italian truck maker IVECO. Nikola will produce hydrogen-powered fuel cell electric trucks in Arizona beginning in late 2023.
Republic is currently testing a single electrified Mack LR Electric refuse truck. That pilot and others will continue, Vander Ark said.
“We’re encouraging everybody to get there,” Vander Ark said regarding electrification of the refuse business.
Refuse industry “prime for disruption”
“The refuse market was prime for disruption,” Nikola Executive Chairman Trevor Milton said during the press conference.
Refuse truck customers typically order a chassis from a truck manufacturer, such as PACCAR Inc., and the body from another supplier. Nikola plans to integrate the chassis and body under a single factory warranty. Refuse bodies will be installed in Nikola’s plant rather than by a bodybuilder or upfitter.
The trucks will include zero-emission automated side loaders and front-end loaders. Electric motors will power hydraulics common to today’s trucks. Republic Services will participate in redesigning the Tre cab for the refuse haulers.
Residential waste collection accounts for 75% of Republic’s business. That means frequent starts and stops that regenerate energy from braking allows the trucks to travel practically for free, Milton said.
“Regen braking pumps every bit of energy into that battery,” he said. “The majority of the energy will be used for collecting cans” and compacting.
The refuse trucks will cost about $500,000 each, on par with the cost of a diesel or natural gas-powered unit. They are expected to carry up to an industry-leading 720 kilowatt hours (kWh) of energy storage in nine 800-volt direct current batteries.
Limited to 1,000 horsepower though capable of 2,000 HP, the trucks offer three times as much horsepower as current diesel and natural gas competitors, Milton said.
Next deal: a truck customer
Nikola expects to announce a truck customer similar to the Republic’s “anchor tenant” agreement for the Coolidge plant before the end of the year, Milton said. The Republic deal was a catalyst in deciding to bring the cabover Tre to the U.S. It originally was planned only for Europe where the design is more forgiving in navigating space-costrained environments.
“The Nikola Tre powertrain is ideal for the refuse market as it shares and uses the same batteries, controls, inverters and e-axle,” he said. “By sharing the Tre platform, we can drive the cost down for both programs by using the same parts.”
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